Sydney, Dec 21, 2017 AEST (ABN Newswire) - Lithium Power (
ASX:LPI) (LTHHF:OTCMKTS) has released a positive preliminary economic assessment (PEA) study for its Maricunga lithium brine project in Chile. Highlights of that study include the following.
- Production - 20,000 tpa of lithium carbonate (LCE) and 74,000 tpa of potassium chloride (KCl) fertiliser.
- Operating costs - US$2,938/t LCE (US$2,635/t post KCl credit).
- Project NPV - US$731 million after tax at 8% discount rate (US$1.049 billion before tax
- IRR of 23.4% (ungeared).
- Capital costs - US$527 million (US$389 million direct costs, including KCl plant).
- Short payback - 2 years and 11 months (based on 2-year ramp-up period).
- Mine life - 20 years (initial).
Analyst comment: this excellent achievement for Lithium Power positions Maricunga to become the next producing lithium asset in Chile and, in our opinion, the standout lithium brine development project globally, due to its forecast exceptionally low operating costs.
While most of the assumptions were in line with our previous estimates, capital costs are higher. We believe there may be scope to reduce these costs in future studies, given that US$137 million of the total capital outlay was for contingencies and indirect costs.
Also boding well for the development of Maricunga is the election of Sebastián Piñera, a conservative billionaire, as the country's president. Piñera is reportedly pro-business and foreign investment, and there is a high degree of expectation that the new government will enact numerous policies to encourage and improve the lithium industry in Chile.
Valuation: we have decreased our valuation of Lithium Power to $1.13/share (previously $1.24). The driver for this reduction was higher capital costs than our previous estimate.
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About Lithium Power International Ltd
Lithium Power International Limited (ASX:LPI) is a pure play lithium company with three distinct project regions to provide diversification. One is located in South America's brine region and three are in Australia's spodumene hard rock areas of Western Australia.
The primary focus is to develop of Chile's next high-grade lithium mine on the Maricunga Salar in an area known as the Lithium Triangle. The Company has also expanded its tenement holdings of lithium exploration prospects in Western Australia.
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